Dan Hodges is a former Labour Party and GMB trade union official, and has managed numerous independent political campaigns. He writes about Labour with tribal loyalty and without reservation. You can read Dan's recent work here

Labour is getting ready to twist the European knife in David Cameron's back by backing an in/out referendum

David Cameron should be a nervous man this afternoon. Labour is seriously toying with the idea of calling for an in-out referendum on Europe.

For several months there has been a spirited, if cordial, debate going on within the shadow cabinet about Labour’s European stance. Ed Miliband – an instinctive pro-European – has been wary of exploiting Conservative divisions on the issue. Key advisers have warned him not to intrude on the Tory’s private grief, and to allow the marauding brigands amongst Cameron’s Eurosceptic backbenchers to do his work for him.

But now a growing number of senior shadow cabinet members believe Labour needs a shift of stance. “This is a big moment,” says one, “Cameron’s preparing a major intervention on Europe, and that presents us a with an opportunity. But we also face a threat if we don’t seize it.”

That threat comes in the shape of Nigel Farage. Attempts to paint him as Nick Griffin in tweed are unfounded. But in bald political terms, Labour sees a growing parallel between the dangers of Farage’s plain-speaking populism and the dangers posed by the BNP before their 2010 electoral implosion. In differing ways both parties held – and in the case of Ukip still hold – attractions for those traditional Labour voters scarred by Tony Blair’s brand of neo-capitalism, but wary of Ed Miliband’s trendy metropolitan liberalism. “There’s a big block of the Labour supporting vote were still not cutting into,” said one Labour insider. “It’s soft. And Farage resonates with them.”

Meanwhile, the opportunities presented by a radical change of tack on Europe are obvious. Were Ed Miliband to successfully outflank the Tories from the Right on such an explosive issue, the implications for David Cameron would be incalculable. “It would be insanity,” said one Labour MP. “His backbenchers would eat Cameron alive, and then they’d eat each other”.

Up till now Miliband’s natural caution, coupled with his desire to present himself as that rare creature, a politician of high principle, have held his finger from the nuclear button of a referendum. But he’s now facing growing pressure to seize the moment.

My understanding is that shadow cabinet members from across Labour’s political spectrum – including Blairite standard bearer Jim Murphy, Left-wing pin-up Jon Cruddas and Brownite dauphin Ed Balls – are all urging Miliband to at least keep his options open over a referendum. And apparently even arch-Europhile Peter Mandelson has come to recognise the political attraction.

“There’s a real concern Labour – as the main pro-European party – somehow get ourselves the wrong side on this,” says one shadow cabinet member. “At the moment we’re not offering anything. We're not advocating radical reform, and we're not offering a referendum. If we stay like this we won’t even be in the debate.”

There’s a growing feeling amongst a significant section of the shadow cabinet Labour needs to move beyond its “empty chair” critique of the Tories. “We're selling the pass,” says another worried shadow cabinet member. “When it comes to the referendum question we haven’t got a response. It’s vital we get out ahead of Cameron before his speech. If we don’t, we’re going to get locked into a position where we basically say nothing.”

To be fair, there are a number of shadow cabinet members busily building up the sandbags in the face of the rising Eurosceptic tide. These include the shadow foreign secretary, Douglas Alexander, and influential Miliband adviser Lord Wood. “The question is, do we want to look at this from the perspective of a party of opposition, or from the perspective of the next government?”, said one shadow cabinet source. “Are we really going to spend the first six months after being elected getting caught up in the minutiae of a referendum campaign, or even worse, spending the full first five years being defined by that referendum?”

Yesterday the New Statesman ran a piece from its political editor Rafael Behr, which sought to frame Ed Miliband as the reluctant “defender of the EU”, and swipe the referendum off the table. Shadow cabinet Euro-sceptics saw pro-European fingerprints all over it: “That piece was a blatant attempt to shut the debate down” said one shadow cabinet insider. “But we can’t afford to do that any more.”

The last thing Ed Miliband wants is for David Cameron’s problems on Europe to start appearing in his own inbox. And up until now Labour’s leader has enjoyed the luxury of being able to sit back and let the Tories beat themselves to a standstill on the issue. But the rise of Ukip has shifted the terms of the debate. A number of Labour strategists now see a direct electoral threat; Europe is no longer an issue Miliband can afford to ignore.

That doesn’t mean he won’t try. All too often Miliband’s leadership has been characterised by a desire to respond to awkward issues by inserting his head firmly beneath the political sand. This time, the sight of his own shadow cabinet armed with spades and buckets should at least give him pause for thought.